Virgin Atlantic

[OltonPete]

United

Routes News - United Airlines would

Pretty clear endorsement from one of the major airlines in the alliance.

Pete

[Fairdealfrank]

VS alliance

It does appear likely that Star would be the Alliance of choice both for VS and the existing Star members. The demise of BD has considerably weakened LHR as a Star hub, and admitting VS (with its new domestic routes) would help remedy this a bit.

[dublinaviator]

One of their Vice Presidents also said they'd love to have Aer Lingus in Star, doesn't mean its gonna happen...

[bermudatriangle]

when do the man-lhr flights start ?

[Fairdealfrank]

Quote: "One of their Vice Presidents also said they'd love to have Aer Lingus in Star, doesn't mean its gonna happen..."

Fair comment, wouldn't EI be more likely to rejoin oneworld if they were inclined to be in an alliance?

[DaveReidUK]

when do the man-lhr flights start ?

31st of March.

[BALHR]

Now I think that VS is a fairly decent airline and I think SRB is a good businessman, but the trouble that we cannot sustain 2 major full-service carriers, the European aviation market has changed since its was formed in the 80s, BAs main competitors are not from the UK, but in Mainland Europe

To make matters worse, LHR is full and we don't have the capacity to serve as many destinations as they do in FRA/MUC, CDG, MAD and AMS, having 2 British full-service airlines competing for the same routes is not a good use of the limited space at LHR

Remember no nation in Europe (bar Germany and in that case due to the Cold War) has any more than 1 full-service airline (in fact Europe is heading towards 2-3 full-service airlines for the whole region

Hence VS (unless SRB is prepared to keep funding its losses) needs to either:

1: Agree a "peace deal" with BA, this will mean in the long run (when SRB retires or decides to call it a day), BA will buy VS, until then BA would buy a 49% stake (from Singapore Airlines), then BA and VS "agree" not to compete with each other on routes (this will mean VS will pull out of all routes that BA also serve, while launching new routes to destinations not served by either airline) and lastly VS joining OW

2: VS should offer to buy BA from IAG (to pay for the restructuring of IB) with the financial support of *A carriers (like when AC bought CP), BA will for a time become a subsidiary of VS and is gradually integrated into VS, then it will also join VS

[PAXboy]

British Airways That's two novel approaches in one post! But it's not going to go either of those ways.

The reason is the same in both case. History shows that a good VS / bmi link did not happen in the 1990s due to male pride and that is the same reason why neither of these will happen.

Also, the long haul competition today is moving rapidly from Continental Europe to the Middle East.

[BALHR]

British Airways That's two novel approaches in one post! But it's not going to go either of those ways.

The reason is the same in both case. History shows that a good VS / bmi link did not happen in the 1990s due to male pride and that is the same reason why neither of these will happen.

Also, the long haul competition today is moving rapidly from Continental Europe to the Middle East.

Well its shame SRB running VS with more passion than business sense, but he has done it before, he sold Virgin Express to its rival SN, So it is not the first time he would do a deal with a rival, he also did the same in relation to Virgin Records

Also yes, BA also has to compete with carriers in the Middle East (well some of them anyway), anyway my point is that unless VS changes that way it does things then the future is not looking bright for them

[Skipness One Echo]

As ever some novel thinking but let me try and explain why it's not a great idea.

Firstly, SRB does not run VS, indeed he has very little to do with the company on a day to day basis. There actually is room for more than one long haul airline, the UK is one of the biggest travel markets for long haul and VS has done well without killing off BA.

The reason France only has one is more to do with politics than market forces! Virgin ATLANTIC does not go anywhere near the Middle East for most of it's passengers. Indeed the short haul operation is overdue and is needed to shore up the home market.

As for VS buying BA? That's the most interesting comcept one yet. Much of the profitability at BA comes from the ATI agreement with American Airlines. There would be huge competition issues if somehow BA took that agreement into STAR or massive loss of revenue of they had to leave it behind to merge with a much smaller operator like Virgin.

On your other idea

this will mean VS will pull out of all routes that BA also serve, while launching new routes to destinations not served by either airline

This would close VS. Every single route from LHR has a head to head with BA, that's where the money is. To move the entire operation into new routes would be financial suicide not to mention massively ****ing off their loyal and frequent fliers. Neither idea has wings IMHO.

[canberra97]

Full service carriersin Europe

France had UTA as there second full service carrier before it was merged with Air France plus the UK had British Caledonian as it's second force airline untill being merged with British Airways in 1987, so yes some European countries have had 2 full service airlines.

[PAXboy]

British Airways

... So it is not the first time he would do a deal with a rival ...

In the 1990s, SRB tried very hard to do a deal with British Midland but it never proceeded. Now, there are many who do not like Branson and his ways and so there are conflicting view and reports as to why it did not happen. But the force being BM/bmi was Sir Michael Bishop and he (it seems clear to me) did not want to do business with SRB.

Also, VS is now a mature business and has to calculate it's risks very differently.

[EI-BUD]

VS is now a mature business and has to calculate it's risks very differently

This is true, but the fact they have limited growth opportunities ex LHR without extra runway capacity poses a problem. They are somewhat isolated, I am not convinced that in its present size and shape (given industry challenges e.g. fuel costs, aircraft costs, etc and the growth of taxes) that it will have a long future.

The business is consolidating and looking at 2012 we will recognise further changes, another reduction in the number of airlines flying in the UK. Malev has disappeared, SAS on very shaky territory. Consolidation will be a key feature in the coming years and regulators may relax the rules in recognition of the challenges that currently exist, what does anybody else think? Perhaps in the interest of jobs in the first instance, debatable comment I know.

EI-BUD

[BALHR]

Firstly, SRB does not run VS, indeed he has very little to do with the company on a day to day basis. There actually is room for more than one long haul airline, the UK is one of the biggest travel markets for long haul and VS has done well without killing off BA.

SRB may no longer run the company day-to-day, but he is the still the owner and any major decision (including deals with BA), hence I am suggesting that the way he runs (where relevant) has more to do with passion rather than business sense

Britain's Air Travel Market is more or less the same size as lets say France, Germany (which is the exception to this due to the Cold War), Spain and Italy which only sustain 1 full-serivce carrier and you have to remember that BA (although not IAG) is making some profit in this market and VS is not, VS is also falling behind BA in terms of its route network as well (because it holds far less slots at LHR), while the BA/VS rivalry will not cause one to go bust, it will get increasingly unsustainable in the long run

BMIs demise was a wake up call for the UK, it cannot sustain (most of all full-service) the number of carriers that are based in the UK, with expansion of our airports proving difficult you also have to factor the space our airports to launch new routes (which are needed), rather than launch routes that already are operated with at least 2 airlines

The reason France only has one is more to do with politics than market forces! Virgin ATLANTIC does not go anywhere near the Middle East for most of it's passengers. Indeed the short haul operation is overdue and is needed to shore up the home market

The reason France had one full-service carrier is not just because of politics, remember France used to have 3 (Air France, UTA and Air Inter), but the reason that changed was that the French Government saw that having 3 was not sustainable with the looming liberalisation of Europe's air travel market, so the decision was due to economic and political reasons

There is nothing stopping another full-service airline operating from France, but the trouble is that it is not sustainable (as BA found out), the only other airlines operating in France today are either Regional (some of which are part of Air France), LCC or charter

As for VS buying BA? That's the most interesting comcept one yet. Much of the profitability at BA comes from the ATI agreement with American Airlines. There would be huge competition issues if somehow BA took that agreement into STAR or massive loss of revenue of they had to leave it behind to merge with a much smaller operator like Virgin.

About AA, we know it is in BK and up for sale, US (a current *A member) is the leading contender to buy it, if *A carriers can make sure that AA/US becomes a *A member (in return for financing a deal, which will mean AAs creditors have less of a say in AA/US), if they refuse, *A carriers could then finance UA to have a go at bidding for AA (I feel that UA would be the best merger partner for AA)

So that BA/AA ATI could be folded into the *A ATI if VS buys BA and UA or US buys AA (thus gaining the large revenues from the BA/AA ATI), it will create some competition issues, but you have to remember that the ST (consisting of AF, KL, DL etc) is also a strong player on the TATL market in its own right so there will not be too many competition issues to deal with

On your other idea

Quote:

"This will mean VS will pull out of all routes that BA also serve, while launching new routes to destinations not served by either airline"

This would close VS. Every single route from LHR has a head to head with BA, that's where the money is. To move the entire operation into new routes would be financial suicide not to mention massively ****ing off their loyal and frequent fliers. Neither idea has wings IMHO.

Well the trouble with BA/VS competing on the same routes is that (because there is a lack of capacity in our airports) it leaves little space to launch new routes to the emerging markets (South America is the biggest problem) which could be profitable, remember the transition to new routes could be aided with funds from BA (they would be partners in the case of the first plan)

As for passengers and FFs, you have to member that under my first plan, BA/VS (until SRB retires and BA fully buy VS) would be effectively operating as one airline and this the passenger experience/FF Programmes will gradually be integrated, so the only effect to those people would be that more routes for BA/VS passengers and the gradual disappearance of VS

[BALHR]

France had UTA as there second full service carrier before it was merged with Air France plus the UK had British Caledonian as it's second force airline untill being merged with British Airways in 1987, so yes some European countries have had 2 full service airlines.

Both examples pre-dated the liberalisation of the European Air Travel Market and the rise of LCCs, and in both cases UTA and BCal where not sustainable in the long run once that it ended (they only ever where due to the fact they where designated routes they could serve and other airlines where given other routes, which is no longer allowed today)

The only example is Germany left and that is due to the Cold War (which meant LH could not serve West Berlin)

[rog747]

virgin flights are busy busy busy
but they are not making any money

they get rid of NBO route and months before it closes its busy in all classes.
cargo was good but they used 340-300 which has weight issues on the route.

CPT never been all year round, but now SAA has pulled off may see VAA
pick up on that. you never saw many south africans on VAA.

HKG you can never get a seat that easy and for years they could have operated 2 most days. same with JNB and that could have been 747 all the time.

MCO 2 x 747 a day from LGW but now you cannot take your kids out of school
will that route go down the pan except in school hols

SirRB maybe had not had his eyeball on his beloved airline like he used to...
his son and daughter seem not that interested in playing with planes which is a pity although the daughter looked like she was being groomed to
get involved, not sure if that is still on or off.

he is personally cash rich so would he would inject into VAA again before
the accountants got nasty.

i'm not comfy with VAA getting involved in short haul, been there done that more than once and it was costly and did not shine.

i think VAA are facing what BA had to do years ago and it will be painful

[chipsbrand]

After many years trying to manage strategy in ther UK airline industry I think the only route forward for VS is to sell out to IAG. IMHO VS has no independent future. It has tried hard to compete but it has found that that course only means losses.

[BALHR]

In the 1990s, SRB tried very hard to do a deal with British Midland but it never proceeded. Now, there are many who do not like Branson and his ways and so there are conflicting view and reports as to why it did not happen. But the force being BM/bmi was Sir Michael Bishop and he (it seems clear to me) did not want to do business with SRB.

Also, VS is now a mature business and has to calculate it's risks very differently.

The big question is that what will happen to VS in the near future, their failed deals with BMI where they last chance to at least start securing their long term future, but now it is a airline that is being run more by passion rather than business sense, SRB is the only reason why it is still around, so what happens after he retires?

Will his children be willing to keep running VS?

Hence why I suggested those 2 ideas

[Cyber Bob]

Neither of the latter two options proffered are viable for VS. VS will do whatever they can to retain their identity and certainly wouldn't emabark and any form of venture with BA etc.

That said, it's no secret that VS are fighting a tough battle to retain it's independance and compete with the bigger players/partnerships. I should imagine that discussions have been held with regards to partnerships and alliances. Couple of sticking points would be

Retaining it's brand
Having partner airlines dumping air miles on them

That's perhaps why there has been no movement on that front - question is, for how long though?

Just my two penneth worth
All the best
CB

[V_2]

BMI used to codesare with VS at LHR, providing significant pax traffic. Now BA control those routes, VS I imagine has lost most of this revenue stream; which I believe is the main reason Virgin has decided to start its own short haul routes where BMI used to provide so well. If this proves successful, it could well help turnaround its finances. Also, having some kind of shaul haul network/larger catchment area must surely help its chances of getting into an alliance?

they get rid of NBO route and months before it closes its busy in all classes.cargo was good but they used 340-300 which has weight issues on the route.

True, it was always very busy. And pax could not understand why a route that was always packed was being axed. Except that actually flights were being cancelled and passengers merged onto 1 flight. Instead of daily, towards the end it went maybe 3-4 times a week. Futhermore the 343's that served it are being phased out, and the new A330s are better served for other routes (like the extra new JFK thats starting, VS0025 I believe?)

CPT never been all year round, but now SAA has pulled off may see VAApick up on that. you never saw many south africans on VAA.

Actually, from experience, I'd say a good 50% + of pax were South African, although very often also dual nationality British/Europe/US green cards etc. SAA and VAA also codeshare, so maybe VAA will just stick to annually JNB and offer pax a connecting flight to CPT. Remember when not flying CPT VAA go ORD instead, which is another high yield service!

Interesting times